A credit card issuer, such as a bank or other financial institution, generally provides credit accounts to consumers, or cardholders, allowing the consumers to make purchases on credit rather than using cash. The consumer incurs debt with each credit card purchase which may be repaid over time according to the terms and conditions of the particular consumer's credit account. Credit card accounts provide a consumer with one or more lines of credit, typically including at least one revolving credit line in which the consumer may choose to either pay the full amount of debt owed on his account by a specified date or defer payment of at least a portion of the debt to a later date. The credit card issuer typically charges the consumer interest or finance charges for such deferred payments during the period of deferral.
The credit card issuer typically establishes a credit limit for each credit account defining the maximum amount of credit available to the consumer for making purchases at any given time. When a consumer makes a credit card purchase, the amount of credit available to the consumer, often called the “available balance,” is reduced by the amount of the purchase; and the amount of debt currently owed by the consumer, often called the “outstanding balance,” is increased by the amount of the purchase.
The credit card issuer typically requires the consumer to pay at least a predetermined minimum amount, often called the “minimum payment amount,” by a certain date, often called the “payment due date,” in order to maintain the account in good standing. If such minimum payment amount is not paid by the payment due date, then the account typically goes into delinquent or “past due” status. The account may remain in delinquent status until the minimum payment is made. If the account remains in delinquent status for a certain period of time, then the credit card issuer reports the account as delinquent to a credit bureau. Such delinquent reports negatively affect the consumer's ability to receive credit in the future.